Getting Productive with China

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This is yet another note about China. It’s hard to stop thinking about it, as our current policies are both dangerously unproductive and difficult to undo.

Let’s start by believing the worst.  Suppose the Chinese really do represent the devil incarnate—the third Reich back again for another racist attempt at world domination.  What should we be doing in that case?

The answer is clear.  The Chinese have a huge population, world-class technology, and the industrial might to back it all up.  They are a formidable adversary, and need to be confronted (as in the past) by a world united against them.  What we need are strong alliances, in the Far East and elsewhere, to counteract the threat.  That alliance must be ready to act in everyone’s interest, with partners able to trust each other’s long-term commitments and no one looking to make a few bucks off the others on the sly.

We just failed that one, so let’s back the threat down.  Suppose the Chinese threat of domination is economic, not military and political.  In that case we need to protect world-wide supply chains, so the Chinese can’t just pull the rug out from under the existing order.  And we need clear rules defining fair trade, so that it’s obvious who is a renegade.  That sounds like some version of TPP and the WTO—so the highest priority is getting those right.  (TPP can’t be too bad, since large chunks of it were taken verbatim in the new version of NAFTA.)  What it doesn’t sound like is our modern version of protectionism, where we reserve the right to do anything we like and impose it unilaterally on anyone else.

Now let’s add one more element to the picture—China is the largest most rapidly growing market in the world.  This is an item of some interest, although it doesn’t get the press it deserves.  For one thing China has just added an inconceivable number of people to the world’s middle class.  One of our grievances is that China has not opened its markets as it should.

There are two remarks to be made.   One is that China has only recently developed enough of an upper middle class to be an effective market for us.  This is a matter for emphasis now, and the maximum leverage is when the US and EU work together (each representing 18 percent of Chinese exports).   There are actually multiple reasons to be guardedly optimistic about current prospects for negotiation.

Second, the fact is that as a country we’re actually rather reluctant exporters.  Our domestic market has always been so large as to be primary.  Going forward, this is a matter of some concern.  For example we claim we want to sell cars in China and elsewhere, but we’re relaxing environmental regulations to help our manufacturers—and guarantee that the mainline production won’t be acceptable in most other countries.  Denying climate change has the same kind of effects across the board.  We can’t forget that open markets are only the first step to actually selling the stuff.  Even today the Europeans, with the same level of Chinese imports as us, have a substantially lower trade deficit.

As a next point, in formulating China policy we should at least make an attempt to think about things from their point of view.  That doesn’t justify it, but we have a large blind spot if we don’t try.   It’s a worthwhile exercise independent of whether we like their current leadership or not.

On that subject the primary factor is that China underwent some of the worst effects of western imperialism, lasting well into the twentieth century.  The Opium Wars deserve their name.  The British made fortunes with opium produced in India and sold under military protection in China.  And the rest of the West joined in.  The Chinese had expected some help in the aftermath of World War I, but were denied.

It is not surprising that the Chinese feel both suspicion and hostility toward the West, as well as a need to be fully in control of their own destiny.  In that light it is easy to imagine the attitude of the Chinese toward Trump’s initial set of demands in the trade war, expressed as terms for unconditional surrender.  It probably made Trump feel important and powerful, but it’s hard to imagine anything less likely to produce real cooperation. As for Chinese attitudes toward the South China Sea and intellectual property, we should remember the “Monroe Doctrine” and the heroes who brought British textile technology to the early US.  That’s not to say they’re right; it’s just counterproductive—and frequently delusional—to approach international cooperation as a moral crusade.

The only solid basis for relations with China (or anyone else) is shared interest—again regardless of whether we like their current leadership or not.  We’re not going to defeat them—in either military or economic terms—so it’s crazy to assume that’s the right model for policy.  (You can even go farther and say that’s it’s not even in our interest, but we don’t have to go that far here.)  They’re no more willing to capitulate than we are, so it’s a lot more productive to stay in the real world.  Mutual trust is a requirement for success.

With that we can make some suggestions:

  1. We should be negotiating rules for open markets and intellectual property protection as a matter for the WTO. As noted, there is ample basis for agreement of those subjects going forward, so there is reason for guarded optimism—meaning not just agreement but cooperation.  To be clear, the US has historically won 85% of its cases with the WTO.
  2. Technological competition with China is inevitable. They are already formidable competitors, but our strengths and weaknesses are different, so there is room for both of us in a growing world economy. Above all we should recognize and take care of our own strengths.
  3. We have work to do in preparing our economy for a world where the outside is at least as important as the domestic market. Not being the world’s biggest economy is a big change.
  4. We have even more work to do to make sure that the whole population profits from an ever more highly-integrated and highly-automated world. That’s not only a moral requirement, but the only way to defeat the parasitic demagogues who threaten to take over here and elsewhere.

Saving the Country

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This note grows out of a comment made during the election night coverage of the midterms.  Analysts were breaking down the vote in various categories, and one of them remarked that if you just look at white voters, this seems like a completely different country:  Republican voters outnumbered Democrats 3 to 2.  They were all-in for the Trump program.

It’s worth paying attention to what that means.  Diversity is not a matter of tolerance; it’s a matter of national success.

Immigrants and their families are assets by any statistical measure.  They need to work harder to succeed, and they do it.   As the various waves of immigration entered this country, they have adapted and prospered, and the country as a whole has benefited.  It’s no accident that the most prominent players in our new economy—Google and Apple—were founded by an immigrant and the son of an immigrant.

But there is another aspect to this as well.   Outsiders (and not just immigrants) are not so easily tempted by images of an idealized past paradise.  Those siren-song images are not from their past, so they can keep focused on reality and the future.

Despite the many similarities between the Trump regime and the early stages of the “illiberal democracies” of Poland and the Czech Republic, our diversity provides perhaps a degree of protection.  White voters have not called all the shots in the midterm election.  And it’s possible to believe that we’ve taken a first step back from the brink.

The problems of the Trump regime affect everyone.  First and foremost, we are squandering our strongest economic advantages out of ignorance and arrogance.  And we are at each other’s throats by conscious choice.  Dictatorships are not just bad for outside groups, they are historically bad for everyone.

So we should give credit where it’s due.  Three cheers for diversity in all of its shapes and colors—the saviors of the country!

 

Don’t Pretend This Election is Normal

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On the economy:  We’ve embarked on an unprecedented binge of deficit-financed stimulus in good times.  In just the past fiscal year the deficit ballooned by an extra $300 B, far more than foreseen.   That’s a great stimulus for the election, but it will be a long, cold winter.

Erratic tariff policy is already causing layoffs and market swings, with the major impact delayed until after the election.  George Bush’s 2002 steel tariffs cost 200,000 jobs;  this time effects will go much wider.  And there is no pot of gold from these trade wars.

Finally we’re setting ourselves up for the very considerable economic consequences of ignoring climate change.

On personal welfare:  Last year’s attack on ACA showed no commitment to do anything serious about healthcare—other than remove the progressive tax that funds it.

The huge business tax cuts have produced no wage increases beyond inflation (and no jump in business investment either).  Further those tax cuts have left no room for education, infrastructure, or social services, leading to recent plans to cut Medicare and Social Security.

Supreme Court justices were chosen to fight unions and satisfy the moral pretensions of the evangelical right.  Roe v Wade is only the beginning.

On freedom: We’ve had ongoing and increasingly brutal attacks on truth and the media.  Trump’s attempts to control the FBI have not succeeded, but by all accounts a win in the mid-terms means replacing Sessions with a more obliging alternative.  We’re reached the stage where we actually have to worry about the Justice Department!

On democracy:  It needs to be emphasized that the Kavanaugh appointment completes Trump’s control of government.  With a committed majority on the Court and capitulation by Republicans in both Houses of Congress, there is effectively no check on what he does.  We haven’t had time yet to understand how bad this is going to be.  Even Constitutional limits only work if the Court will enforce them.  Without a Democratic majority in the House, there is nothing protecting the nation from whatever comes into his head—trade wars, real wars, silencing of opposition, personal vendettas, whatever.

Our founding fathers chose democracy for a good reason.  They knew all about one-man rule.  Democracy is inherently fragile, but that’s what made us what we are.  We need to preserve it.  VOTE.

Unity and Divisiveness

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Newspapers are filled with discussions of our political divisions and whether we can ever return to unity and shared national values. Many of those discussions are quite philosophical.  This one is not.

The first thing to note is that divisiveness is hardly surprising when the two strongest political forces in the country are actively inciting it:

– The mainstream Republican Party is at this point inseparably intertwined with the Koch organization for both money and organization.  There is no secret about the Koch organization’s objective.  They want to return to a world where their ultra-rich members run the country, pay minimal taxes, and do anything they want.   Consequently they want minimal government with defense and very little else—no regulation, only basic education, no social services.   Since those are not necessarily popular positions, the Kochs have been systematic about divide and conquer, using the Tea Party and later Trump as front men to stoke culture wars.  Pence, Pompeo, Gorsuch, and Kavanaugh are examples of Koch people.  These are the people behind the scenes in the famous NYTimes op-ed piece.

– Trump is a populist front for the Kochs, but with his own objectives as well.  For Trump divisiveness is the name of the game.   It’s his people against the enemy with a siege mentality to build loyalty among the followers.

 

The conclusion from this is that the polarization of attitudes is not entirely—or even primarily—a matter of differing philosophies.  What you have on one side are the self-serving programs of the Koch organization, together with justifications their think tanks have concocted to sell them.   On the other side is a set of attitudes—starting with democracy and including even an immigration proposal—many of which were shared by both parties until the Koch people bought the Republicans.

As noted, Trump and the Tea Party are populist fronts.   Contrary to what you read every day, the Tea Party was not a spontaneous movement; it was created and funded by the Koch organization.  Its prominence, and the prominence of its message were only possible because of the level of funding.  The Tea Party presaged Trump in the “true-believer” attitudes of the members.  The Kochs had studied techniques of the communist party (of all things) to understand how to sell the message of secular paradise.

Trump is a step beyond.  For one thing he has brought the cult of personality to the cult of secular paradise.  For another he has added his own program to the program of the Kochs.  In so doing, he has become a complete mask for what is going on.  His tariff program—no matter how ill-conceived—really sounds populist, and his culture war persona is impeccable.  He’s always in the news.  The Kochs were undoubtedly delighted to see their tax program go through as his achievement.

If Trump really does make himself a dictator the Kochs may get more than they bargained for (and we get to live with it), but for now—despite tariffs, racism, and scapegoating—he’s their guy.

 

So going back to the question of divisiveness, where exactly do we stand?   Support for the Koch-Trump program is of two sorts:  there are those who really do benefit (some level of rich), and there are Trump’s true believers.  Many articles have remarked on the strength of the reciprocal love that binds the latter group with Trump.   Not an easy thing to address.

Why did these people buy in from the beginning?  Lots of reasons have been presented:  economic factors, racism, cultural conflicts, or simple non-homogeneity of the population.  While there is plenty of evidence for the non-economic reasons, it makes sense to focus on the economic ones to start with, because those create an environment where the other evils can flourish.  People fighting over scraps are unlikely to play nice.  It’s true that polarization is self-sustaining once it starts, but addressing people’s concrete problems always has to be a first step.

One thing going for change is that the ideology of private sector salvation has now had a chance to show its true colors.  The tax cuts did not get turned into bonanzas for employees; instead they got turned into this dramatic and revealing chart:

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Furthermore healthcare was a fiasco, and even climate change is emerging as a threat.  The tariffs only sound good—more people buy and build cars than make steel.

The only way any of that matters is if the Democrats do take the House.  If that happens, the Democrats have a chance to show that they can produce solid programs for real problems.  Healthcare was well-chosen if we can get our act together and really do it.  The opioid crisis is still untouched.   It would be nice to produce a jobs program that can get people out of Walmart.  The Republicans have tried to poison opportunities with the tax cuts, but we’ll have to figure a way out.  The ACA tax might be a model.

So the message is that the way back from divisiveness may be more ordinary than it seems.  Stop calling people names and figure out ways to make visible progress.  That may even lead to forced cooperation between parties.  Even if nothing gets implemented, it will be clear what could be.

And someday there may even be justice for the Republican Party’s prolonging the pain of the 2008 crash, so they could deliver the Koch tax cuts!

Never-Never Land

You can’t turn around today without someone talking about how great the economy is.  Low unemployment and low inflation.  What could be better?

In fact you don’t have to look far to know something’s wrong.  For once this is less a matter of lies than of myopia.   We’re living in an artificially-created bubble, and while we don’t know exactly when it will end, this is never-never land.   We’ll go through it step-by-step:

– The bubble

We incurred $985 B of deficit this fiscal year as short-term stimulus to an economy already at full employment.  That’s a monumental $300 B over last year—in good times. As in every other such case, the tax cuts are NOT paying for themselves.  During the year we had a small reduction in unemployment from 4. 1% to 3.7%, but at no faster rate than last year and with no increase in inflation-adjusted wages (one-time bonuses from the tax cuts were negligible in the statistics).  You might ask why we would do such a thing—$1 T is a lot of money—but one thing the deficit certainly delivers is that much more economic activity in an election year.  The same people who starved recovery from the 2008 crisis to help with the 2016 election gave themselves a big boost for this one.

You might also ask how long we can continue doing it, and the following budget chart makes that unmistakably clear:

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We’re running up unimaginable deficits in good times, with consequences we’ll talk about in a minute.  And the chart actually understates the situation.  The underlying figures come from a CBO report written in April, when their estimate of the 2018 deficit was $805 B. With a final 2018 deficit of $985 B, the situation now looks considerably worse. The CBO report said that we would reach deficit = $1T by 2020 and then reach the sinister milestone of debt = total GDP by 2028.  With the current deficit, we have reached the $1 T value in 1/3 the time, so that second milestone looms sooner now too.

The stock market is a similar case. The corporate tax cuts went directly to company bottom lines, raising price/earning ratios and stock values. What’s more corporations turned around and used all that money for stock buybacks, increasing demand for stocks and further enhancing stock prices.

None of this is sustainable.

– The deficit

Much discussion of deficits seems theoretical, but the consequences of our current deficits are real.  Republicans are already talking about cuts to Medicare and Social Security as counterpart to last year’s tax cuts.  Just imagine now we’ve reached a downturn in the economy—not even necessarily as bad as 2008.  We’ll have the massive deficit-induced debts shown in the prior chart, and now—on top of that—tax receipts that have just collapsed with the economy.  In that case we’re not talking about changes around the edges of Medicare and Social Security, we’re talking about no money for it and “taking the hard choices we just have to do.”   That means dramatic change in what it means to be living in this country.

Further (as noted in the CBO report) the deficit is a time bomb.  As interest rates rise in good times, the yearly cost of financing the deficit rises accordingly.  We’re already talking about deficit finance costs higher than the defense budget.  And it will just continue up, eating into available money for healthcare, education, opioid crisis even before a downturn.  There are good reasons not to incur deficits in good times!

– Our economy

With all Trump’s talk about the private sector and relief from regulation you might think that the country has been liberated from misguided government meddling with private enterprise.  But you’d be wrong.  The current executive-imposed tariffs and trade wars constitute the most extreme government intervention in the economy within memory.

The steel tariffs hit anyone building anything out of steel—basically forcing export-directed activities off shore.   The new USMCA regulations have already caused layoffs at Ford (and the touted benefits to labor are so far from clear that the unions can only wait and see).  The trade war with China disrupts values chains of any corporations not sufficiently well-connected to get exemptions.  The government is choosing winners and losers in the economy based on impulse (coal and steel sound good) or lobbying (the Apple watch).  And established companies have been winning out over newer, innovative ones (net neutrality) any time the issue comes up.

All of that, together with xenophobia and lack of support for education, augurs poorly for the state of our economy going forward.  And we’re even waging economic war with the largest, most rapidly growing economy in the world—in the name of protectionism!

– Our population

Since the subject is the economy, we’re talking here about the related topics of personal and national economic success.  It is of course a truism that the world economy is changing.  Good jobs, and the jobs that maintain our national standard of living, are changing.  Very many of them require more and different training.  (One list of the top ten growing job categories is given here.)  Economists going back to Adam Smith have recognized the responsibility of government to educate the population.

However with the tax cuts we took a very different tack, essentially trusting private sector prosperity to raise all boats.  There is no evidence that works.  The tax cuts went primarily to stock buybacks (see the mind-boggling level of buybacks below), leaving issues such as education (including the student loans crisis), infrastructure, and healthcare up for grabs.

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For now, protectionism is the solution to job retraining, consequences of automation are unaddressed, and instead of preparing people for good jobs we’re busy fantasizing about the past.

– Climate Change

Climate change belongs on this list, because inaction will just make the economic effects worse.  Climate change may have morphed into a partisan issue, but nature isn’t fooled.

Consequences will be in many forms—severe weather, changes of temperature and rainfall, sea-level rise.   Turning around today’s carbon-based economies takes time, so if we don’t start acting now, we’re talking many trillions of dollars of expenses for repair and to forestall truly disastrous consequences.  The recent IPCC report found more serious effects than previously recognized by 2040.   As the following chart shows, the US currently generates twice the per-capita CO2 of any other major player, so we have a long way to go.

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For now we are doing worse than nothing.  Climate change is an issue where international unity of purpose is extremely important, because cheaters—with cheap coal—can prosper.   We have not only endorsed coal for ourselves but actively encouraged cheating.  Further our departure from the Paris Agreement process—and in particular our disavowal of the whole idea of rich countries helping poorer ones act in our common interest—leads directly to dangers such as Brazil abandoning protection for the Amazon.

Ignoring climate change means more damaging effects of warming, and more drastic (and expensive) action in the end.   Furthermore, as a purely economic issue, by denying the issue we are sidelining our own companies’ participation in this necessary multi-trillion-dollar enterprise.  The day will soon come (we’re now talking just 20 years to get off coal, oil, and gas) when this moves to page 1 of the news, and stays there.

 

Our never-never land economy is good only so long as we keep our eyes closed.  But if we don’t open them soon, we won’t recognize what we’ll find later.

Kavanaugh Nightmares

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This subject is too painful to talk about but too painful to leave alone.  A few points:

– The fundamental danger of the Kavanaugh appointment was of course clear from the start—it was clear from the moment that Kennedy announced his retirement.  One way or another we were going to get a Supreme Court majority for authoritarian control of the country.   Since the Supreme Court enforces the Constitution, this is the fox in the hen house.

– The Kavanaugh hearing made matters worse in two ways.  The idea that law-giving on abortion and contraception might be determined by a perpetrator of sexual assault was bad enough, but additionally we were given the spectacle of Kavanaugh’s unhinged rant about liberal conspiracies with the implied threat (now soon to be realized) of revenge.  The final act, with Collins presenting the Party’s carefully-crafted whitewash of the whole affair, was an apotheosis of hypocrisy.

– The press has thus far, as usual, attempted to normalize the situation.  The word “conservative” is a handy tool in this effort.  As if these people represented an ordinary, conservative political wing rather than a takeover of the country to subvert democracy for the foreseeable future!  Even the focus on Roe v Wade has this effect, by making it sound like the problem is limited to a few specific issues.

Instead this takeover of the court will pervade all aspects of society.  Here are a few more examples of what may be in store:

  1. Essentially all regulatory agencies risk shutdown. The new “conservative” mantra is that delegation to regulatory agencies is unconstitutional, i.e. any regulation has to be a law passed by Congress.  Since that is as a practical matter unworkable, none of it can happen.
  2. The 14th Amendment can be weakened out of existence (the Constitution only exists as interpreted by the Court), limiting the ability to address racism or LGBT issues.  This is a stated “conservative” objective.
  3. Selected portions of Medicare, Social Security, and other aid programs can be eliminated as unconstitutional. This works directly to the Koch organization’s goal of drastically cutting government to reduce their taxes.
  4. Basic problems of the society can become unaddressable. Education, student loans, healthcare, opioid crisis, etc. can be made untouchable by any future Congressional effort.
  5. Fundamental free speech rules can become unenforceable. Trump could be able to shut down the NY Times or Washington Post on whatever pretext he chooses.
  6. Rule by Presidential fiat can become the norm, as only the Court can challenge it. With the example of the current trade wars, arbitrary control of the US economy will erode its strengths for all of us.

That’s what’s looming for the not-so-distant future.  It doesn’t change our immediate goals, as the mid-term elections are now more important than ever.  But it will be a tough battle, and the unprincipled savagery of today’s Republican Party has been vividly on display.

Losses of War

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The current trade war with China is so ill-conceived and damaging to the US that one hardly knows where to start.

As one point of departure, it’s worth pointing out that the rhetoric around the trade war sounds like the kind of propaganda campaign used to pump up public support for a real war.  It’s all about “winning” and vilification of the Chinese, as if we’re going to knock them down, so that they’ll never threaten our dominance again.

Given that rhetoric it’s worth pointing out a few basic facts:

– China has been overall good for the American economy.   Much of Chinese manufacture is done for American supply chains.  Low prices and high quality of Chinese exports have helped American companies to sell value-add products worldwide, and has also benefited American consumers.  American businesses, with few exceptions, are not pushing for the tariffs.

– There is of course no question about the decline in good, well-paying jobs for people without specific skills.  The Chinese have contributed to that by making good, cheap stuff, in part through undervaluing their currency.   They perfected outsourcing from spec to such a degree that they have made themselves suppliers of choice, leading to declines in manufacturing jobs in the US. While all of that is true, it is also true that they are scapegoats as much as perpetrators for the consequences.   The Chinese are not the source of growing inequality in the US—we did it to ourselves.  And that, as much as the Chinese, caused the pain frequently blamed on globalization.

– The rhetoric around the trade war is remarkably vague over exactly who or what is being defended.  When the subject is the deficit, that makes it sound like the Chinese are stealing from our economy.  But businesses are not tariff supporters, and the deficit is just plain not measuring the right things.  The iPhone is a good example.  It is a fantastically profitable product for Apple—sold at 300% markup over the imported hardware–but it counts as a big loss for the deficit, because the profits are declared in Ireland and Luxemburg for tax purposes.

So maybe we’re doing it for employment.  But the same people who are pushing this are fighting unions, so it pays to look closer.  There’s no guarantee that the tariff-protection will be positive for jobs, particularly good jobs.  Tariffs are a tax, and a very expensive and unsure way to protect a few jobs while putting many more at risk.  To emphasize this point, it should be noted that the new tariffs on China are much like the previous steel tariffs in that they are assessed on basic commodities rather than finished goods—which means that they put all businesses that make the finished goods at risk.   This is obvious in the case of steel, but many of the new tariffs affect hardware which American companies use as platforms for their software—as in the iPhone example.  So the result is much the same as for steel.

– Finally the specific evils attributed to the Chinese—theft of intellectual property, currency manipulation, unfair competition in China and elsewhere—are resolvable issues, as we will discuss shortly.  The trade wars guarantee that those resolvable issues will now be sacrificed to the raw emotions of war.

 

To understand where we stand with China, it helps to think a little bit about recent history.  Over the past twenty years the Chinese economy has come from nowhere to now surpass the US in total volume.  (However, the Chinese population is so large that per capita income is still well-below Mexico.)

The result is that China has transitioned from a country with no capacity to absorb imports and an economy 100% based on export-driven growth—to a country with a middle-class market comparable to the US.  One indication of the transition is the sudden appearance of Chinese tourists everywhere in the West.

That change has many consequences.  For growth, it means that the Chinese are acutely dependent on prosperity in the West for continuing growth of such a huge economy.  For intellectual property, it means that the Chinese have as much to defend as we do.  For imports, it means that the Chinese middle-class has as much interest in western goods as it does in western travel.  And the Chinese are now supporting their currency rather than undervaluing it.

All of that means that—though negotiation with China will certainly not be easy—there is a common interest recognized by all parties.  This is already happening in particular domains, such as financial services.  The world is ready for a historic step—international trade agreements opening China as a major economy and preparing for an era of worldwide growth to the benefit of all parties.  That’s what we are torpedoing with the trade wars, undermining the necessary trust between participants.

Regardless of what we think we’re negotiating, the trade wars mean we’re giving up on access to the biggest economy in the world, growing at 6%, in favor of protected industries at home.  Trade wars are not like real wars in one important respect—we have limited control of the results from the agreement we reach.  People will still have to buy the stuff, and industries have many ways of avoiding a result that no one wants.   An agreement reached (as the Chinese have said) with a knife at the throat is unlikely to bear fruit.  “Winning” in Trump’s sense has little to do with this situation.  And the “it’s no fun winning unless everyone else loses” attitude is a proven recipe for disaster—for us.

If we look toward the future, we are not going to make China go away as a world power—and it’s not to our advantage to do so.  And it’s certainly delusional to think they are just a bunch of cheats whose only talent is in stealing from us.  If we want to be successful, we need to build upon our strengths.  China is a legitimate challenger technologically, and we will fall behind if we don’t recognize what those strengths actually are.  There was one such list of strengths in the NYTimes today;  here we’ve also given a more technology-oriented list.  Many of those items are at-risk in the current anti-science and xenophobic environment.

We should recognize that if we play our cards right, the value of our openness and democratic structures cannot be overestimated, compared with China’s authoritarian regime.   (One can even argue that China’s enormous growth was largely in spite of, rather than because of, its central authority, and that Xi is tightening the screws.)  I’m old enough to remember when we worried about Japan overtaking us, through their disciplined, top-down economy.  There was even a moment where they too had a central technology plan that was going to leave us far behind.   That never happened, and the dynamism of what we represent continued to reinvent itself in the many decades that followed.

And the whole world got richer.  That should be our future also.